Many types of transactions and access to services are authorized by the presentation of some form of identification/transaction/access card such as a credit card, debit card, voter registration card or a health care access card. Such cards will be hereinafter referred to as transaction cards. Many of these transaction cards have incorporated a stripe of magnetic material on which information has been written by the issuer of the transaction card to aid in either access to services and/or identification of the transaction card holder.
Visual verification of identity plays a role in many types of transactions and security procedures. For example, signatures, fingerprints or images of faces are compared in to establish identity. The creation of a fraudulent identities or the misrepresentation of identity results can allow individuals to commit fraud and breach security systems.
One system which relies on verification of identity for transactions is the credit and charge card system. These cards are an increasingly popular means for consumers and validation requestors to complete transactions. However, part of the cost incurred from this convenience is the burgeoning growth of card fraud. In 1991 the estimated cost to the financial industry for credit card fraud was $1.58 billion. The cost of this fraud is paid for by the banking/credit industry, but it is passed to the consumer in the form of higher card interest rates and fees and to the validation requestors in the form of additional transaction commission fees.
Methods used to combat this fraud have been the use of holographic images on cards, the need for validation requestors to obtain transaction approval, the encoding of cardholder information on magnetic strips on the back of the card, and signature verification. A well-known approach is to have image information available for visual verification that the card bearer is the authorized owner (see Luther G. Simjian, "Verification System using Coded Identifying and Storage Means," U.S. Pat. No. 3,569,619, issued Mar. 9, 1971) and is an important component in the present invention. A further refinement on this system is to scramble the image information (see Robert L. Nathans, "Counterfeit Proof ID Card having a Scrambled Facial Image," U.S. Pat. No. 4,972,476, issued May 11, 1989). Again, the descrambling and reconstruction of the facial image is validated at a single location. This could be defeated by a counterfeiter who has access to the scrambling algorithm. A similar notion is to have a decryption key carried along with the transaction card, either by a PIN number or other device encoded on the magnetic stripe (see Frank T. Leighton and Silvio Micali, "Method and System for Personal Identification," U.S. Pat. No. 4,879,747, issued Mar. 21, 1988.) Recently the added feature of including a digitally printed likeness of the authorized cardholder has been introduced, known commercially as the Photocard, issued by Citibank. All of these methods have had some initial success, though each has been or will be eventually defeated by increasingly sophisticated counterfeiting. In the case of the photographic image on the card, the initial drop in fraud, in the New York test markets, has been as high as 67%. This reduction will likely diminish in time.
Other approaches have needed sophisticated equipment and/or the need for the cardholder to remember or have available special auxiliary information such as a personal identification number (PIN). As the typical consumer is estimated to carry between 8-10 transaction cards, it is impractical for the consumer to remember and correctly match the PIN numbers with the proper transaction card. This solution will meet with significant resistance from customers. The need for auxilial equipment, such as scanners, video cameras, special gates and the like all will fail due to the added inconvenience to the consumer, in addition the sophisticated transaction card criminal will not be deterred by such equipment.
The difficulty with most methods is that there is largely a single point of transaction card validation (hereinafter called the point-of-sale). In the case of the Photocard, the image only resides with the card and is checked only by a clerk at the point-of-sale. Most clerks do not check these cards, and in some instances the card is never in the possession of the clerk. In order for a verification to be successful there has to be measures which occur both at the point of sale as well as through the denial of the transaction via a slight modification in the current card approval process.